29 January 2011

Innovation in Marketing

Last week I attended the Installation Dinner of the Worshipful Company of Marketors at Stationers’ Hall, one of the ancient and great Livery halls near St Paul’s Cathedral. The Installation Dinner is to celebrate the election of a new Master and this year’s Master, Jim Surguy has chosen “Innovation” as his theme for the year as he believes this is what underpins business growth. To open the batting as his first guest speaker Jim invited Mark Price, the Managing Director of Waitrose. Few companies have demonstrated their commitment to Marketing Innovation better than Waitrose and it helps that before he took the role of Managing Director he had been the supermarket chain’s Marketing Director where he oversaw a raft of innovations which, despite difficult economic times and fierce competition, have seen Waitrose consistently grow its top line and increase its market share.

Mark began by stating that there were only two proven business models in supermarket retailing. You either positioned yourself as a low cost supplier and did everything possible to drive down your buying and selling costs or you appealed to the aspirational consumer who looked for greater quality, wider ranges and a commitment to innovation. To follow this model required both courage and patience and Waitrose had held to that course for many years now. Its current strategy was based on five themes:

1.Quality. This involved an overriding commitment to quality in all aspects of food retailing but particularly to high quality products as evidenced by its deal to sell Duchy Originals on an exclusive basis. My ears pricked up at this as I was one of the team of Marketing advisers who worked with HRH the Prince of Wales on the launch of this brand back in the 1990’s. He wanted to demonstrate to his tenant farmers in the Duchy of Cornwall that improved marketing would enhance their operations. He wanted this to help with the balance of payments in food. He wanted to encourage organic farming. And if there was a surplus he wanted this to go to his charities. All of these objectives were met through the successful launch of Duchy Originals. The first products were biscuits, then drinks and later the range was extended widely. So too was distribution, contrary to the advice we had originally proffered which was to keep it tight and the brand got into some difficulties. The deal with Waitrose has helped to resolve these.

2.Service. Waitrose inherits the strong service ethic from its parent, the John Lewis Partnership and of course enjoys the same concept of ownership by the employees. It is no coincidence that in such an organisation where everyone receives an annual profit share high levels of service can be maintained and partners are encouraged to suggest improvements to service levels. My wife and I recently gave a party which was catered by Waitrose which delivered a quantity of delicious canapés at the appointed hour on a Sunday morning.

3.Health and well-being. Waitrose has directly targeted Boots as a competitor and seeks to take share in the health and well-being category. It has deduced that its customers are more likely to take an active interest in such products and again its relationship with John Lewis will be helpful as that retailer has developed its range of fitness products.

4.Effort in the environment. Along with the Coop I believe Waitrose has done as much as any retailer in developing its green credentials without over claiming. Many retailers are waking up to the message about climate change and other environmental concerns but Waitrose has been active in this area for many years. For example its commitment to a sustainable fishery policy is second to none.

5.Convenience. Waitrose customers will be as demanding as any for high levels of convenience. They are time poor while their pockets are sufficiently well lined to pay the higher prices that their aspirations incur. Nevertheless, current Waitrose advertising claims that for 1,000 branded items Waitrose matches Tesco on price.

Mark concluded by saying that the most important lesson was to know your customers well. This may not sound like a blinding insight but it is surprising how many businesses fail that test.

Another entrepreneur who is committed to Marketing Innovation is Tim Smit KBE. Tim addressed a Criticaleye reception before Christmas and impressed everyone with his missionary zeal. He is famous for his work on the Lost Gardens of Heliganand the Eden Project, both in Cornwall.

He worked as an archaeologist before diverting into the pop music business, working as a song-writer and producer receiving seven platinum and gold discs. He told us that he gave this up when he was being driven to an award show in Paris when he realised he was not enjoying himself, did not have his mates with him and turned round and went back to the airport.

In 1987 he moved with his family to Cornwall and became involved with Heligan. Later he started the Eden Project, near St Austell, an £80 million initiative to build two transparent biomesin an old china claypit. The biomes contain different eco-climates: rainforest and Mediterranean. Eden aims to encourage a greater understanding and empathy with environmental matters.

As a highly innovative and successful businessperson, Smit has been outspoken in his views on issues such as social enterprise and entrepreneurship. In a 2008 interview, he said:

“Britain is crap at being entrepreneurial because (a) it's a risk averse country, and (b) the stigma of failure is so high that if you fail you're considered to be a loser. Entrepreneurism is a word that has been stolen by people who don't understand it. The truth is that people who are entrepreneurial take risks, and risk is something that is un-British, and if you're successful with it they'll hate you for it.”

I had a most enjoyable chat with Tim after he gave his speech. Like many entrepreneurs he is iconoclastic and unorthodox. He likes to hold dinners with his staff and reserves serious discussion about strategy for such occasions because he believes that only at these dinners do the staff really say what they think.